Author: Miller Value Partners CEO Bill Miller; Translated by Baishui, Golden Finance
In 2015, we published “The Case for Bitcoin for Value Investors?!” arguing that Bitcoin had the potential to become more valuable both as a payment processing network and as an alternative to fiat capital. Despite Bitcoin’s recent record highs against all fiat currencies, I believe Bitcoin remains significantly undervalued today and that the world may be in the early stages of a long-term shift in how humanity views capital and its governance.
At its core, money is a system of accountability. The challenge with current monetary systems is that humans control them, and human judgment is fallible and influenced. The insatiable desire to transfer accountability and power ultimately leads to the debasement of money as politicians and regulators fight for control and co-create new units in the process, devaluing each unit. However, as Lyn Alden points out in his excellent book Broken Money, history shows that the best monetary technology inevitably wins as people trade out inferior, capital-degrading technologies for superior technologies that better align with the users’ goals, which is to preserve or increase their choice sets over time.
Humans are notoriously bad at contextualizing the relevance and potential of new technologies, a point my father highlighted in 2017. This gap is particularly pronounced for breakthrough concepts of an epistemological nature—inventions that change the way we think about and relate to information and each other. This also explains why NVIDIA, Google, and Meta have generated excess returns relative to other stocks.
Unlike anything we have seen before, Bitcoin is a true technological breakthrough because there now exists a virtually immutable, automated, and transparent global ledger network whose decentralized governance enables property rights to be transferred across time and space without human permission or the possibility of confiscation. The promise of Bitcoin is simple - that changes in a person's purchasing power should not be controlled by an authority tied to the circumstances of their birth.
What is its intrinsic value? No one can say precisely, but my view is that in a world fast approaching a quadrillion-dollar capitalization fiat governance system, its intrinsic value is several times its current $1.5 trillion market cap. In other words, while Bitcoin’s blockchain is more accountable and more secure than the best fiat currency governance systems, it still only represents one percent of the addressable market for global capital. As a truly groundbreaking technology, Bitcoin is inherently subject to unforeseen developments and shifts in perceived value, and may ultimately be worthless to some, but I believe that continued neglect of Bitcoin will pay dividends for those who do so over the next decade, just as it has over the past decade — and not for the better.
It's too early now.
